Stock Ticker

  • Loading stock data...

Barrick Gold Corporation (USA) (NYSE:ABX) Intends To Restart The Suspended Operation

Boston, MA 05/29/2014 (wallstreetpr) – Barrick Gold Corporation (USA) (NYSE:ABX)  aims to obtain the permission to restart the Pascua-Lama gold and copper mine, which was suspended temporarily during the fourth quarter of 2013. The gold miner initially signed an agreement with 15 local community groups to run the projects in Chile-Argentina border.

Why Suspension

The Company failed to secure the legal and regulatory compliance on the projects. Factors like lower gold and silver prices along with the uncertainties revolving around the projects primarily drove to suspend as it will increase the cash outlays in the near-term.

The Impact

In 2013, the gold miner produced 7.17 million ounces of metal with adjusted operating expenses (OPEX) of $566 per ounce and $915 per ounce as all-in sustaining costs (AISC). The expenses were lower than the prior guidance for adjusted OPEX of $610-$660 per ounce and AISC of $1,000-$1,100 per ounce due to market volatility and project suspension.

As a result of the suspension, the Company recorded an additional impairment loss $896 million that brought total impairment loss of $6.0 billion for Pascua-Lama project in 2013. It also reduced the total capital expenditures to $5.0 billion during 2013 from its original guidance of $5.7-$6.3 billion.

Why To Restart

Barrick Gold Corporation (USA) (NYSE:ABX) currently focuses on optimization plan and divests non-core assets and develops new mines so to increase production and improve the operating cash flow.

Therefore, the Company decides to restart the Pascua-Lama operation with favorable market improvement and expects to seek the approvals of the communities, legal and regulatory. The company expects an incur costs of $300 million related to the obligations associated with the projects in 2014.

Final Take

Barrick Gold Corporation (USA) (NYSE:ABX) also anticipates $75 million of capital expenditures towards Pascua-Lama project and, therefore, expects total cash outflows of $700 million in 2014. In addition, lower costs associated to the expansion of mines will further reduce the total capital expenditures to $2.4 to $2.7 billion in 2014.

Published by Steve Hackney

Steve Hackney is a corporate finance professional with over 14 years of experience in cash management and investing. He earned a Bachelor of Science in Finance from Florida State University and holds a Certified Treasury Professional certification. Steve lives in Orlando, Florida with his family.

  • Recent Stories

    SignUp Now For Our Featured Newsletter

    Sign Up To Get Our Latest Stocks Alerts